Gold Price Forecast: XAU/USD eyes further upside on downbeat United States Treasury bond yields

Gold price (XAU/USD) seesaws around $1,785 after posting the biggest daily gains in a week as buyers seek more clues to approach the five-month top marked earlier in the week.

The yellow metal’s latest run-up could be linked to the downbeat performance of the United States Treasury bond yields and the US Dollar weakness. In doing so, the Gold price also cheered upbeat headlines from China. It should be noted that the latest pause in the XAU/USD run-up could be linked to fears emanating from Russia.

Gold price trace United States Treasury bonds

A rush towards risk safety could easily be witnessed as the United States Treasury bond prices rallied, together with the Gold price, which drowned the bond yields and the US Dollar. That said, the benchmark 10-year Treasury bond yields dropped to the lowest since early September, losing 3.30% in a day to 3.42% at the latest. Further, the two-year counterpart dropped 2.54% to the 4.26% mark. With this, the US Treasury bond yield curve, the difference between the long-dated and the short-term bond yields, inverted the most in over forty years.

While checking the underlying reasons, the fears of global economic slowdown and the Federal Reserve’s (Fed) readiness to go easy on the interest rate hikes gained major attention.

In addition, the recently softer prints of the United States second-tier data, namely the trade balance and Unit Labour Costs for the third quarter (Q3), become additional catalysts to weigh on the US Dollar and propel the Gold price. It should be noted that the US Goods and Services Trade Balance deteriorated to $-78.2 billion versus $-79.1 billion expected and $-73.28 billion prior. Further, the final readings of the Unit Labour for Q3 eased to 2.4% QoQ versus 3.5% first estimations.

Mixed headlines from China, Russia confuse XAU/USD bulls

China announced multiple measures to ease the three-year-long Zero-Covid policy and bolstered the market sentiment before the risk appetite weakened. The dragon nation’s downbeat prints of the Trade Balance, Imports and Exports seemed to have probed the positive vibes. On the other hand, Russian President Vladimir Putin teased a nuclear war by saying that nuclear weapons could be used to defend itself and its allies.

Light calendar to tease gold traders

Although the softer United States Treasury bond yields and US Dollar keep the Gold buyers hopeful, a lack of major data/events could test the metal’s short-term upside. Even so, the weekly prints of the US Jobless Claims may gain attention after the recent disappointment from the Unit Labour Costs for Q3, which could please the XAU/USD buyers in case of a downbeat outcome. That said, market consensus suggests the US Initial Jobless Claims to rise by 230K versus 225K prior during the week ended on December 02.

Gold price technical analysis

Gold price flirts with a three-week-old horizontal resistance area surrounding $1,785 after multiple bounces off the 100-bar Simple Moving Average (SMA), close to $1,764 by the press time.

The XAU/USD recovery also takes clues from the firmer Relative Strength Index (RSI) line, placed at 14. Additionally, the impending bull cross on the Moving Average Convergence and Divergence (MACD) indicator keeps buyers hopeful.

That said, the Gold price appears all set to cross the $1,800 threshold. However, an upward-sloping resistance line from early October, around $1,815 at the latest, could challenge the XAU/USD buyers afterwards.

Alternatively, pullback remains elusive unless the quote stays beyond the 100-SMA level near $1,764.

Even if the Gold bears manage to conquer the key SMA support, a broad horizontal area comprising levels marked since October 04, close to $1,730-32, will be in focus.

Gold price: Four-hour chart

Trend: Further upside expected